FARMERS MORE UPBEAT ABOUT CURRENT AG ECONOMY, BAROMETER REPORTS

FARMERS SEE CURRENT CONDITIONS AS BETTER THAN THOSE IN THE FUTURE.

As they prepared to go to the field, U.S. farmers carried with them a slightly higher level of optimism about the agricultural economy, according to the latest Ag Economy Barometer.

The sentiment reading tool indicates that farmers are more optimistic about current farm economic conditions than those in the future.

Producer sentiment inched higher during April as the Ag Economy Barometer increased to 130. The latest result for the Purdue/CME Group Ag Economy Barometer, which is based on a monthly survey of 400 U.S. agricultural producers, was slightly higher than March’s 124 reading, but still well below January’s peak of 153.

When compared with a year earlier, sentiment among producers was much improved, up 23% in April 2017 from the April 2016 reading of 106. More broadly, agricultural producers’ sentiment since December 2016 has been notably more positive than at any other time since data collection began in October 2015.

The barometer’s two sub-indices, the Index of Current Conditions and Index of Future Expectations, both turned higher in April. Although the measure of producers’ forward-looking expectations – the Index of Future Expectations – is still notably lower than its January 2017 peak, the Index of Current Conditions has been trending upward since August 2016. In fact, the Index of Current Conditions reached a survey high of 127 in April, topping its previous high of 125, which was set in December 2015.

AG THOUGHT LEADERS
In parallel to the producer survey, a quarterly survey of 100 agricultural thought leaders is also conducted. The agricultural thought leader group is comprised of agribusiness executives, agricultural lenders, commodity and farm organization leaders, as well as agricultural economists in the academic and government sectors. Expectations regarding the farm economy’s health among the thought-leader group increased by about 12% in April compared with the previous survey conducted in January. Similar to the results from the producer-driven Ag Economy Barometer Index, agricultural thought leaders’ sentiment in early 2017 is much more positive than last fall.

CROP PRICE EXPECTATIONS WEAKEN
On the April survey, producers were queried regarding their expectations for commodity prices over the next year. When asked if they thought soybean prices would be higher, lower, or about the same in 12 months, a pessimistic shift was observed compared with a year earlier. While the majority of respondents (54%) expected prices to be “about the same” 12 months ahead, more respondents expected “lower” soybean prices (27%) than “higher” soybean prices (17%).

This is quite different from a year earlier as the share of respondents expecting “lower” prices in the April 2017 survey was more than double the percentage of respondents expecting lower prices in the April 2016 survey (13%).

A second measure of producer perceptions about future commodity price direction focused on expectations for December 2017 corn and November 2017 soybean future prices.

In both the January and April surveys, producers were asked if they thought the December 2017 corn futures contract price would 1) exceed $4.25 per bushel and 2) fall below $3.50 per bushel between the survey date and fall 2017. Survey respondents were less optimistic about corn and soybean prices in April than in January.

For example, in April just 28% of respondents thought the December 2017 corn futures contract price would exceed $4.25 per bushel vs. 38% back in January.

With respect to soybeans, the question focused on expectations for November 2017 soybean futures prices 1) exceeding $10.50 per bushel and 2) falling below $9 per bushel between the survey date and fall. The change in soybean price expectations was more dramatic than for corn. The percentage of respondents expecting soybeans to exceed $10.50 per bushel plummeted from 44% in January to just 23% in April.

On the other end of the spectrum, the percentage of respondents expecting November 2017 soybean futures prices to fall below $9 per bushel increased from 35% in January to 45% in April.